Market Update - 21.08.24

CURRENT MAJOR TOPICS WITH THE TOURISM INDUSTRY IN THE DACH REGION

• TUI RECORDS GROWTH IN SUMMER AND NEXT WINTER: Group-wide revenue for the summer is 9% higher than in the previous year. In the third quarter of financial year 2024, TUI generated record turnover of 5.8 billion euros with 5.8 million guests, up 9% year-on-year. Underlying earnings before interest and taxes rose by 62 million euros to 232 million euros. TUI CEO Sebastian Ebel emphasized the expansion in Asia and America as well as the extension of the product portfolio. All segments in the Holiday Experiences Business, which includes hotels, resorts, cruises and TUI Musement, recorded a positive development. The hotels achieved an occupancy rate of 80%, while the cruise segment achieved an occupancy rate of 98%. In Markets & Airlines, earnings more than doubled, with the Central Europe region standing out with a 13.6% increase in turnover. TUI expects an increase in revenue of at least 10% and a profit increase of at least 25% for the full year 2024. Read more

• WHAT'S BEHIND THE COOLCATION PHENOMENON: Climate change could influence the travel behavior of Germans in the future, according to a study by the EU Commission. It predicts that cooler regions such as Scandinavia could become increasingly popular, while southern vacation destinations such as Spain and Greece may be less in demand. Some countries, such as Sweden, are already specifically advertising “coolcation”, i.e. cooler vacation alternatives. However, this trend cannot yet be clearly confirmed. According to Kerstin Heinen from the German Travel Association (DRV), classic sun destinations such as Turkey, Spain and Greece remain the favorites of German holidaymakers. Demand for trips to hot regions such as the United Arab Emirates is also strong. While Scandinavia is seeing record numbers of overnight stays, particularly from German tourists, southern countries such as Spain are also continuing to experience rising visitor numbers. Tourism researcher Jürgen Schmude emphasizes that a redirection of travel flows is a slow process. Most travelers adapt their behaviour rather than fundamentally changing their vacation destinations. A rapid change in travel destinations is therefore unlikely, although a long-term change is possible. Read more

• THESE ARE THE ISSUES THAT MOST CONCERN TRAVEL AGENCIES: Travel agencies are currently facing several challenges, as a survey by Reise-vor9 shows. Irregularities in air travel, in particular last-minute changes to flight times and departure points, are the most frequent burden on the work of travel agencies. Over half of those surveyed named this as one of the most pressing problems. The poor service provided by airlines and tour operators is also criticized. Many travel professionals complain about the increased workload due to inadequate support, for example with seat reservations and check-in. In addition to these operational problems, many travel agencies are also concerned about the weakening economy in Germany. Families with children in particular, which used to be an important customer group, are increasingly disappearing. Almost 40 percent of survey participants also expressed concerns about uncertain political prospects and geopolitical crises. Another problem that concerns around a third of respondents is the growing power of technology-driven companies such as Check 24, which are intensifying competition. The shortage of skilled workers is also a cause for concern. It is criticized that many companies in the sector no longer provide sufficient training and are therefore neglecting the next generation. The lack of investment in training and incentives for new skilled workers further exacerbates the problem. Read more

• WEALTHY CHINESE WOMEN WANT LUXURY, BUT DIFFERENTLY: Wealthy Chinese women, especially from the Millennial and Generation X generations, are revolutionizing the luxury travel market. According to a report by Jing Daily, based on a survey by Finn Partners and ILTM Asia Pacific, these women increasingly value experiential luxury over material goods. 71 percent of affluent Chinese travelers surveyed prefer investing in travel and experiences over buying luxury fashion or jewelry. A notable trend is the rise in solo travel among these women, with 72 percent looking to maintain or expand their solo travel activities. This shows a growing need for self-determination and independence. At the same time, wellness trips and niche destinations are gaining in popularity. Almost 90 percent of respondents prefer destinations that stand out for their natural beauty and cultural significance, away from the usual tourist attractions. The financial independence of these women also leads to autonomous travel decisions, with 82% seeing their own preferences as the deciding factor. This shift towards experiential luxury and personal development requires tourism companies to design customized itineraries that combine classic attractions with unique off-the-beaten-path experiences. Read more

• AI TO MAKE EXPIS' WORK MORE EFFICIENT: AIntensify, a brand of the travel tech start-up Cruisewatch, aims to make travel agents more efficient through AI language analysis. The technology analyses customer inquiries via telephone, email, social media or chat and provides personalized service suggestions. The aim is to reduce the number of contacts and gain more time for personal advice. CEO Markus Stumpe emphasizes that AI supports work, not replaces it. To demonstrate the added value, AIntensify is making a dashboard available free of charge. The company is planning to expand into other sectors and markets and gradually grow the team. Read more

• MONKEYPOX - A RISK FOR THE TRAVEL INDUSTRY?: The Mpox outbreak in Africa, particularly in the Democratic Republic of Congo and surrounding countries, is worrying but does not pose a significant risk to the travel industry. While the number of infections has increased significantly in 2023 and 2024, the risk of transmission to the general population remains low as the virus is mainly transmitted through close physical contact, especially sexual contact. Travelers should exercise caution when traveling to affected regions and inform themselves about possible protective measures. However, a pandemic on the scale of Covid-19 and a serious threat to the travel industry is unlikely. Read more

• SALES MOOD IMPROVES IN AUGUST: In August, Dr. Fried & Partner's Tourism Sales Climate Index shows a positive trend. 52% of respondents rated the current situation as “good”, an increase compared to July. The proportion of situations rated as “satisfactory” remains at 38%, and negative ratings have fallen to 10.3%. 36% of participants report an improvement in the sale of travel services, compared to 28.6% in July. 40% see no change and 23% report a deterioration. For the next six months, 28% expect demand to increase, 57% stable demand and 15% a decline. With regard to the earnings situation, 28% expect an improvement, 51% expect stability and 20.7% expect a deterioration. Read more

• HOW PROTESTS AGAINST TOURISM CAN BE COUNTERACTED: According to Swiss tourism researcher Christian Laesser, protests against tourism can be mitigated through targeted measures. First of all, tourists should be better informed about local culture and rules of conduct in order to avoid misunderstandings and conflicts. In addition, technical systems for managing visitor flows can help to reduce overcrowding in sensitive areas. Another option is to adjust pricing: higher entrance fees could not only regulate the number of tourists, but also generate additional income for the local community. Finally, some of this revenue should be invested in public infrastructure and local projects to make the benefits of tourism tangible to the locals. It is crucial that the measures actually lead to a tangible benefit for the residents, otherwise their effectiveness will be called into question. Read more

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CURRENT TOPICS WITHIN THE TRANSPORTATION INDUSTRY IN GERMANY & EUROPE

• TURKISH AIRLINES WITH GOOD FIGURES FOR SECOND QUARTER: In the second quarter of 2024, Turkish Airlines recorded a positive development in both passenger numbers and total revenue. The airline carried a total of 22.1 million passengers, an increase of 7.7% compared to the same quarter last year. Total revenue rose by ten percent to 5.7 billion US dollars, with passenger revenue accounting for 81 percent of this, thanks in particular to strong Far East connections. Despite these successes, profit from the main business fell by 26 percent to 591 million US dollars due to global inflation and increasing competition. In contrast, cargo revenues increased by 48 percent year-on-year to 885 million US dollars. Turkish Airlines' fleet grew from 420 to 458 aircraft in the first half of the year and is to be expanded to 800 aircraft by 2033. The airline also plans to further expand its global route network and introduce new destinations in countries such as Chile, Saudi Arabia, Egypt, Russia, Spain and others in 2024. Read more

• EUROWINGS NOW ALSO OFFERS EXCURSIONS: Eurowings, Germany's largest vacation airline and subsidiary of Lufthansa, now also offers excursions. In cooperation with the adventure and tour provider Get Your Guide, direct customers can also book activities at their destination when booking their flight on the Eurowings website. This new function makes it possible, for example, to combine dolphin watching in Mallorca or food tours in Rome directly with the flight booking. Customers benefit from exclusive discounts and can collect frequent flyer miles in the Miles & More program. It is also possible to cancel booked activities at short notice up to 24 hours in advance. Read more

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DESTINATION NEWS

• ALBANIA: The Albanian Riviera, once an insider tip for adventure seekers, is now the scene of dramatic change. The remote coastline, which was once only accessible via the winding Llogara Pass, is now being developed by large-scale tourism projects. Huge hotel complexes are being built in places that were once known for their untouched nature. Mass tourism promises jobs and economic growth, but it also comes at a price. Environmentalists and residents of the surrounding mountain villages warn of the long-term consequences of this development. The unique landscape and traditional life of the region could be irretrievably lost if the focus is solely on short-term profits. The question remains whether Albania is putting its future at risk with the uncontrolled expansion of tourism by destroying what originally made the country so attractive to travelers. Read more

• ISRAEL: The ongoing conflict and instability in Israel, particularly since the October 2023 terrorist attacks by Hamas, have led to a significant downturn in tourism. Many tour operators who traditionally organize trips to Israel have been forced to seek alternatives due to the travel warnings and the difficult security situation. Most operators have halted their Israel tours altogether. For example, companies like Biblische Reisen, Diesenhaus, Studiosus, and Gebeco, which previously offered regular tours to Israel, have paused these operations. However, some, like Scuba-Reisen, continue to offer limited trips under strict safety guidelines, though with significantly reduced numbers. To mitigate the impact, tour operators are redirecting clients to other destinations. For specialized operators with a strong focus on Israel, the transition is more challenging. Biblische Reisen, for example, is offering new tours centered around Jewish history in Europe, with a focus on Germany, Prague, and Italy. Diesenhaus is also promoting destinations like Georgia, Armenia, and Malta, though these regions present their own challenges. Overall, while some tour operators can adapt by offering alternative destinations, the situation remains difficult for those heavily reliant on Israel tourism. The future of these businesses will likely depend on the resolution of the ongoing conflict and the stability of the region. Read more

• BERLIN: Berlin recorded a significant increase in tourism in the first half of 2024. According to a statement from Visit Berlin, six million guests visited the German capital from January to June, resulting in over 14 million overnight stays. Compared to the previous year, this represents a 6.5 % increase in the number of guests and an increase in overnight stays of almost four percent. The number of international visitors grew particularly strongly, increasing by 13.4 % to around 2.2 million. These guests spent a total of 5.8 million nights in Berlin, which corresponds to an increase of 8.8 %. Events played a decisive role in this increase. Major events such as the UEFA Euro 2024 brought more international attention to Berlin, according to Franziska Giffey, Senator for Economics, Energy and Public Enterprises. In June alone, almost half a million visitors came to the city during the European Football Championship. Other highlights that attracted many visitors were the Caspar David Friedrich exhibition, the DFB Cup final and the Carnival of Cultures. Another rush of visitors is expected in the fall, when the 35th anniversary of the fall of the Berlin Wall will be celebrated with various events. Read more

• JAPAN: Japan remains a fascinating destination for German vacationers, but it is becoming apparent that the country is losing out in some areas. Despite low prices and an impressive culture, Japan has lost its technological edge, particularly in the automotive and electronics sectors. While the country continues to impress with its strict order and traditional methods, it often seems antiquated in an increasingly digital world. Although Japan continues to offer unique experiences, the question is whether it can keep pace with modern developments. Read more

• SPAIN: A study by the EAE Business School predicts a drop in tourism earnings of up to 15% for Spain due to climate change. The warming Mediterranean, more frequent heatwaves and environmental problems such as erosion and flooding are influencing holidaymaker behavior. Although Spain saw a record 85 million tourists in 2023, more and more travelers are considering climate risks and sustainability when choosing their destination. The EU study confirms a trend in which tourism flows are shifting northwards, while southern coastal regions are becoming less attractive. In the short term, however, high tourist numbers remain possible, while in the long term, places such as Galicia in the north could be in greater demand. Read more

• CUBA: Tourism in Cuba continues to decline sharply. In 2023, only 2.4 million guests visited the island, down from 4.2 million before the pandemic. The target of 3.2 million visitors is also expected to be missed in 2024. The decline in German holidaymakers is particularly sharp: from 243,172 in 2017 to 58,715 in 2022. Despite this difficult situation, the German tour operator Aventoura remains active. Christoph Blaha, who has been working for Aventoura in Cuba for 15 years, reports that tourism is only making slow progress. Aventoura continues to offer round trips and individual tours and enjoys a good reputation locally. Cuba's economic difficulties, such as power cuts and fuel shortages, are affecting tourism. Nevertheless, Cuba tours are still in demand due to their uniqueness. However, the price-performance ratio in Cuba is often inadequate. The private sector, especially restaurants, is developing positively and the country remains generally safe for travelers. Read more

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